Investment Pitches

Pitch Summary:
Doximity is an application that operates like a social media platform for doctors and health care professionals. The company reported quarterly earnings where it reduced revenue guidance for fiscal 2024 and announced that it would cut approximately 10% of its workforce. Doximity is an application for doctors and other healthcare professionals and operates like a social media platform for doctors. It primarily makes money on advertising for biopharmaceutical companies. Its offering is unique, given the ability to target physicians accurately by specialty and reach a high percentage of a drug company's target physician list, making it an attractive alternative to spending on sales representatives. It also has a unique advertising format that meets regulatory requirements, captures physicians while working, and provides drug insight and detail that's more attuned to medical journal advertising. Doximity is already a very profitable business, and with attractive software-like economics without having to spend much to acquire users or customers, it has an attractive runway for growth.

BSD Analysis:
Polen Capital initiated a position in Doximity despite near-term headwinds including reduced fiscal 2024 revenue guidance and a 10% workforce reduction. The manager is attracted to the company's unique position as a professional network for healthcare professionals with highly targeted advertising capabilities for pharmaceutical companies. Doximity's ability to accurately target physicians by specialty and reach a high percentage of drug companies' target lists provides a compelling alternative to traditional sales representative spending. The platform's regulatory-compliant advertising format and software-like economics with minimal customer acquisition costs create an attractive business model. Polen views the current profitability combined with the growth runway as compelling, suggesting they see the recent guidance cut as a temporary setback rather than a fundamental impairment to the long-term opportunity.

Pitch Summary:
Discount retailer Five Below reported a quarter that was in line with expectations but lowered next quarter's outlook, influenced by higher than-normal "shrink" (theft of goods). We discussed the topic of shrink with management, who is implementing measures to mitigate this, and the impact on margins. We believe these issues are manageable, and the company's long-term prospects remain promising.

BSD Analysis:
Polen Capital maintains a constructive view on Five Below despite the company lowering near-term guidance due to elevated inventory shrinkage from theft. The manager's direct engagement with management provides confidence that the shrink issues are being addressed through specific mitigation measures. Polen views these operational challenges as temporary and manageable rather than structural problems that would impair the long-term investment thesis. The firm's assessment that the company's long-term prospects remain promising suggests they view the current headwinds as a short-term obstacle in an otherwise attractive retail concept. This perspective reflects Polen's focus on the underlying business fundamentals and management's ability to execute solutions rather than being swayed by temporary margin pressures.

Pitch Summary:
Alight, a leading cloud-based provider of employee engagement and workplace benefit tools, delivered quarterly financial results. However, it saw share price weakness as management revised expectations for next year's business process as a service (BPaaS) subscription growth. We added to the position opportunistically as we think the company's fundamentals remain on track, and the long-term opportunity remains promising. At the same time, the margin of safety on the stock is attractive.

BSD Analysis:
Polen Capital maintains conviction in Alight despite near-term share price weakness following management's revision of BPaaS subscription growth expectations for the following year. The manager views the selloff as an opportunistic buying opportunity, adding to the position based on their assessment that underlying fundamentals remain intact. Polen emphasizes that the long-term opportunity in employee engagement and workplace benefit tools remains promising, suggesting confidence in the secular growth drivers of the business. The attractive margin of safety created by the stock's decline provides additional downside protection while maintaining upside exposure to the company's long-term growth potential. This contrarian approach reflects Polen's focus on fundamental value over short-term market sentiment.

Pitch Summary:
CCC Intelligent Solutions, a new position over the quarter and leader in automotive insurance data, rose as it was announced that Bain Capital was considering taking the company private. CCC Intelligent Solutions is a market leader in the automotive insurance market through its CCC One platform. Their vast and growing data set offers a unique position to leverage data analytics and AI to automate the insurance claims process. Their customers – insurance carriers and repair shops – continue to face headwinds from inflation – including labor, parts, and more complex repairs, given greater advances in vehicle technology. The business is a SaaS ("Software as a Service") business model that generates high returns on capital and has durable growth. The CEO has a track record of investing early in technology (cloud, AI) to keep CCC ahead of the industry and consistently use its vast data set to create additional value for customers.

BSD Analysis:
Polen Capital initiated a new position in CCC Intelligent Solutions, viewing it as a market leader in automotive insurance technology with significant competitive advantages. The company's CCC One platform leverages a vast and growing data set to provide AI-powered automation for insurance claims processing, addressing key pain points for insurance carriers and repair shops facing inflationary pressures. The SaaS business model generates high returns on capital with durable growth characteristics, while the CEO's track record of early technology investments positions the company ahead of industry trends. The potential Bain Capital take-private offer that drove the stock higher validates Polen's investment thesis about the company's strategic value. Polen appears confident in the long-term growth prospects driven by increasing vehicle complexity and the need for automated claims processing solutions.

Pitch Summary:
Yeti, an outdoor and lifestyle brand known for its coolers and outdoor leisure products, delivered solid sales and margins growth, albeit lower than expected for the quarter. However, the market reacted positively to the company raising full-year guidance due to robust demand in the cooler business and lower freight rates, which should positively impact margins.

BSD Analysis:
Polen Capital maintains a positive view on Yeti Holdings despite quarterly results that came in below expectations. The manager emphasizes the company's decision to raise full-year guidance as a key positive catalyst, driven by strong underlying demand in the core cooler business. Lower freight rates represent a meaningful tailwind for margin expansion, addressing one of the key cost pressures that have impacted the business. While sales and margin growth were solid but not exceptional in the quarter, the guidance raise suggests management confidence in the business trajectory. The market's positive reaction to the guidance update validates Polen's thesis that the fundamental drivers of the business remain intact despite near-term execution challenges.

Pitch Summary:
Goosehead Insurance, a personal line property and casualty insurance brokerage primarily focused on home and auto markets, rose close to 20% over the quarter, bringing its year-to-date return to more than 115%. The company delivered another quarter of robust results, continuing to execute its plan to clean up the corporate organization and return the company to its pre-COVID-19 productivity metrics. Total revenue increased 31% year on year, core revenue grew 27%, and premiums, the leading indicator of future revenue growth, increased 36%. Margins also showed healthy expansion. Broker upgrades and inclusion in the S&P Small Cap Index further boosted the stock.

BSD Analysis:
Polen Capital maintains a bullish stance on Goosehead Insurance following exceptional quarterly performance that drove the stock up nearly 20% in Q3 and over 115% year-to-date. The manager highlights the company's successful execution of its post-COVID organizational cleanup strategy, which is restoring productivity metrics to pre-pandemic levels. Revenue growth remains robust with total revenue up 31% year-over-year and core revenue growing 27%, while the 36% increase in premiums serves as a strong leading indicator for future revenue expansion. Margin expansion demonstrates operational leverage in the business model. The company's inclusion in the S&P Small Cap Index and broker upgrades provide additional validation of the investment thesis. Polen's confidence appears well-founded given the combination of strong fundamental execution and positive market recognition.

Pitch Summary:
We trimmed our position in CSL to help fund the addition of Novo Nordisk. Based in Australia, CSL is a global leader in plasma-derived pharmaceutical products and vaccinations. Its recent acquisition of Vifor Pharma has also added products for iron deficiencies, nephrology, dialysis, and rare diseases. The growth opportunity for CSL in all these areas remains attractive, and we believe it is still highly competitively advantaged thanks to its scale and the breadth of its portfolio. We remain optimistic about CSL's growth opportunity and believe it can grow revenues at a high-single-digit rate and earnings at a double-digit rate for the coming five years. But we also note that CSL's valuation is comparable to Novo Nordisk's, despite moderately slower growth expectations and similarly robust competitive advantages, thus making it a good candidate to help fund the purchase of Novo.

BSD Analysis:
Polen Capital maintains a bullish long-term view on CSL despite trimming the position for portfolio management purposes to fund the Novo Nordisk purchase. The fund highlights CSL's leadership position in plasma-derived pharmaceuticals and vaccines, enhanced by the recent Vifor Pharma acquisition that expanded capabilities in iron deficiency, nephrology, dialysis, and rare diseases. Management expects high-single-digit revenue growth and double-digit earnings growth over the next five years, supported by the company's scale advantages and diversified portfolio breadth. The fund emphasizes CSL's strong competitive positioning and attractive growth opportunities across multiple therapeutic areas. However, the relative valuation comparison with Novo Nordisk influenced the portfolio allocation decision, as CSL trades at similar multiples despite moderately slower expected growth rates. The trim reflects portfolio optimization rather than fundamental concerns about the business quality or long-term prospects.

Pitch Summary:
Novo Nordisk is a leading pharmaceutical company based in Denmark, focused on developing diabetes and obesity care products. The company began by developing human insulin for diabetes patients, eventually expanding into synthetic insulins and other diabetic pharmaceuticals. Most recently, it has been among the leading innovators of GLP-1 drugs, which help people with diabetes control blood sugar levels but have also shown to aid in weight loss. Novo Nordisk's best known GLP-1 drugs—Ozempic (for diabetes) and Wegovy (for obesity)—are already blockbusters and have become well-known in popular culture for their dramatic results. Today, GLP-1 drugs account for nearly 70% of Novo Nordisk's sales and are the major engine of growth for the company, given the large populations affected by diabetes and obesity. In the U.S. alone, over 10% of the population has diabetes, and over 1/3 of the adult population is obese. We agree with analyst estimates that the size of the addressable GLP-1 market in the U.S. is nearly $100b and the global addressable market as large as $200b+ (including diabetes and obesity patient populations). While Novo Nordisk already faces competition from Eli Lilly in GLP-1s (and will gradually face even more competition in the coming years). We believe they are well-placed to retain high market share thanks to a first-mover advantage, its good track record of working with metabolic diseases, and its extensive body of already-conducted research showing the substantial efficacy and safety profiles of its drugs. Driven by GLP-1 drugs, we expect Novo Nordisk to be able to grow revenues at a mid-teens rate and earnings at a high-teens rate for the next five years. At ~ 30x forward earnings, we believe the shares are appropriately valued.

BSD Analysis:
Polen Capital initiated a new position in Novo Nordisk, highlighting the company's dominant position in the revolutionary GLP-1 drug market for diabetes and obesity treatment. The fund emphasizes the massive addressable market opportunity, estimating $100 billion in the U.S. and over $200 billion globally for GLP-1 therapies. With GLP-1 drugs comprising nearly 70% of sales, Novo Nordisk is well-positioned to capitalize on this secular growth trend driven by widespread diabetes and obesity prevalence. The manager expects mid-teens revenue growth and high-teens earnings growth over the next five years, supported by the company's first-mover advantage, proven track record in metabolic diseases, and extensive clinical research demonstrating drug efficacy and safety. Despite emerging competition from Eli Lilly, Polen believes Novo Nordisk will maintain high market share through competitive advantages. At approximately 30x forward earnings, the fund views the valuation as appropriate for the growth profile and market opportunity.

Pitch Summary:
Lastly, Amadeus, a global leader in IT solutions for the airline industry, has seen a weaker stock price over the past three months, likely owing to market concerns around weaker consumer spending that might pose headwinds to the travel industry.

BSD Analysis:
Polen Capital acknowledges Amadeus's recent stock weakness but provides limited commentary on the company's fundamental outlook or investment thesis. The fund attributes the decline to market concerns about consumer spending impacts on the travel industry rather than company-specific issues. As a global leader in airline IT solutions, Amadeus benefits from the essential nature of its technology infrastructure for airline operations. The company's mission-critical reservation and inventory management systems provide recurring revenue streams and high switching costs. However, the brief commentary suggests Polen may be reassessing the position given travel industry cyclicality concerns. The fund's neutral tone indicates they are monitoring developments rather than expressing strong conviction in either direction.

Pitch Summary:
Teleperformance, the world's leading outsourced customer service provider, continues to see its stock price under pressure due to a weaker IT services backdrop and lingering concerns about generative AI disrupting Teleperformance's business model. We retain our conviction that these AI-related concerns are overblown and that the weaker macro backdrop is the primary culprit for the company's slower growth. We still view Teleperformance as a high-single-digit revenue growth business over the long term. In our opinion, the stock's current NTM P/E of ~8x is very compellingly undervalued.

BSD Analysis:
Polen Capital maintains strong conviction in Teleperformance despite significant market concerns about AI disruption and macro headwinds affecting the customer service outsourcing industry. The fund believes AI-related fears are overblown and that current weakness stems primarily from macroeconomic factors rather than structural business threats. Management views the company as capable of delivering high-single-digit revenue growth over the long term, supported by its market-leading position and global scale advantages. At approximately 8x next-twelve-months P/E, the valuation appears extremely attractive for a market leader with defensive characteristics. The fund likely sees AI as more of an opportunity to enhance service delivery and margins rather than a disruptive threat. Teleperformance's diversified client base and essential service offerings provide resilience during economic uncertainty.

Pitch Summary:
Evolution AB is one of the world's leading providers of online gaming solutions for the casino industry. The stock's underperformance this past quarter and year to date may be attributable to broad concerns around consumer spending growth and more specific concerns around the U.S. market—individual states have been slow to move legislation forward that would legalize online gaming. Still, Evolution's fundamental performance has been quite robust, in our opinion, and we have yet to see signs of these concerns impacting the business. We will continue to assess these potential risks should they materialize. In the meantime, Evolution's current NTM P/E of ~17x looks inexpensive for a business estimated to grow revenues by 20% this year.

BSD Analysis:
Polen Capital views Evolution AB's recent underperformance as a temporary disconnect from strong fundamental performance rather than a reflection of business deterioration. The fund acknowledges legitimate concerns around consumer spending and slow U.S. regulatory progress for online gaming legalization but emphasizes that these headwinds have not yet impacted actual business results. The manager highlights Evolution's robust fundamental performance and market-leading position in live casino solutions. At approximately 17x next-twelve-months P/E for a business expected to grow revenues 20% annually, the valuation appears attractive relative to growth prospects. The company's dominant market share and technological advantages in live dealer gaming provide sustainable competitive moats. Polen Capital will monitor regulatory developments while maintaining conviction in the long-term growth trajectory of online gaming adoption.

Pitch Summary:
Lastly, despite a weaker IT services backdrop in recent quarters, Globant's top-line growth has exceeded consensus expectations and that of its industry peers in our view. We attribute this outperformance to the company's strong positioning with its clients and its expertise in digital transformation, which has become table stakes for large enterprises.

BSD Analysis:
Polen Capital maintains confidence in Globant despite broader IT services sector headwinds, citing the company's ability to outperform both consensus expectations and industry peers. The fund attributes this outperformance to Globant's strong client relationships and specialized expertise in digital transformation services. The manager emphasizes that digital transformation has become essential for large enterprises, positioning Globant as a critical partner rather than a discretionary vendor. This strategic positioning provides defensive characteristics and pricing power even in challenging macro environments. The company's focus on emerging technologies and innovation differentiates it from traditional IT services providers. Globant's consistent execution and market share gains demonstrate the strength of its specialized service offerings and client-centric approach.

Pitch Summary:
According to our research, MercadoLibre continues to demonstrate all the signs of a strengthening e-commerce/fintech platform. In the most recent quarter, the company reported revenue growth of nearly 60% in local currency terms despite very difficult growth comparisons from the past two to three years. As we see it, nearly all key metrics for the company continue to trend very positively.

BSD Analysis:
Polen Capital expresses strong conviction in MercadoLibre's dual e-commerce and fintech platform strategy across Latin America. The fund highlights exceptional revenue growth of nearly 60% in local currency terms, which is particularly impressive given challenging year-over-year comparisons from the pandemic-driven growth period. The manager emphasizes that virtually all key performance indicators continue trending positively, suggesting broad-based strength across both commerce and financial services segments. This performance demonstrates the company's market leadership and execution capabilities in the rapidly growing Latin American digital economy. The fintech component provides additional monetization opportunities and customer stickiness beyond traditional e-commerce. MercadoLibre's dominant market position and expanding ecosystem create significant competitive advantages in the region.

Pitch Summary:
Sage Group's stock has delivered compelling returns the past few months due to favorable 1H23 results and higher full-year revenue guidance. The company's cloud solutions should continue to drive robust growth on the top line, with the potential to reach a double-digit range this year.

BSD Analysis:
Polen Capital maintains a bullish stance on Sage Group following strong first-half 2023 results and raised full-year revenue guidance. The fund manager highlights the company's cloud transformation as the primary growth driver, with expectations for top-line growth to potentially reach double-digit levels in 2023. This represents a significant acceleration from historical growth rates and reflects successful migration of customers to higher-value cloud-based solutions. The positive momentum in cloud adoption should drive improved recurring revenue visibility and higher margins over time. Sage's position in the small and medium-sized business software market provides defensive characteristics during economic uncertainty. The recent stock performance validates the successful execution of the cloud transition strategy.

Pitch Summary:
EXL Services is an outsourced businesses services and analytics company with a long track record for driving digital transformation. EXL's specialization and reputation in the insurance industry has also been a point of differentiation and served as a springboard to grow the business. We previously owned EXL but sold the position when the company navigated a difficult transition. Encouragingly, the company managed very well through that difficult period and upgraded the management team, which has brought more discipline to their capital allocation, as evidenced by increasing returns on invested capital. Looking ahead, we anticipate mid-teens free cash flow growth and capital to be deployed towards share buybacks and small acquisitions.

BSD Analysis:
Polen Capital has renewed confidence in EXL Services following successful navigation of a previous difficult transition period and management team upgrades. The company operates as an outsourced business services and analytics provider with particular strength and reputation in the insurance industry, which serves as a differentiation point and growth platform. Polen previously owned the stock but exited during a challenging transition, demonstrating their disciplined approach to position management. The fund manager is encouraged by improved capital allocation discipline under the upgraded management team, as evidenced by increasing returns on invested capital. Polen projects mid-teens free cash flow growth with capital deployment focused on share buybacks and strategic small acquisitions. This represents a second-chance investment where Polen believes the company has emerged stronger from previous challenges with better management and more disciplined capital allocation.

Pitch Summary:
XPEL is a leader in the automotive paint protection film ("PPF") market. PPF is popular for high-end vehicles and gaining broader traction due to the solid value proposition and XPEL, which drive market growth. XPEL is a notable name and brand that has become synonymous with paint protection. It has the most extensive distribution network and exceptional software to aid installation centers. We believe it's still early for paint protection as the product gains traction with dealers, OEMs (original equipment manufacturers), and a broader set of consumers. While the product may seem simple, the infrastructure cannot be easily replicated. Regarding value-creating reinvestment, XPEL is planting the seeds for many years of growth with early investments in Europe and opening up PPF to new markets such as architectural and Marine. The financial model is also robust, with 20% operating margins, compelling free cash flow conversion, a solid balance sheet, and high returns on capital.

BSD Analysis:
Polen Capital sees XPEL as a dominant player in the emerging automotive paint protection film market with significant runway for expansion. The company has built a strong brand that has become synonymous with paint protection, supported by the most extensive distribution network and proprietary software for installation centers. Polen emphasizes that while the product appears simple, the infrastructure and distribution network create meaningful barriers to entry that cannot be easily replicated. The fund manager believes the market is still in early stages as PPF gains adoption among dealers, OEMs, and broader consumer segments beyond high-end vehicles. XPEL's geographic expansion into Europe and diversification into architectural and marine applications provide multiple growth vectors. The financial profile is attractive with 20% operating margins, strong free cash flow conversion, solid balance sheet, and high returns on capital, supporting sustainable growth investments.

Pitch Summary:
Clearwater Analytics is a leading provider of investment portfolio reporting and analytics solutions. It uses advanced data and analytics to serve as the book of record across many asset classes for investment managers, corporations, insurers, and pension funds. The company analyzes and reports over $6.4 trillion in daily assets across numerous accounts. Their software simplifies operations and ensures accuracy, speed, and scalability—adding significant value for customers while reducing complexity. We believe that the company is poised to sustain its robust growth trajectory, achieving annual top-line growth of 20% with meaningful margin expansion over our five-year investment horizon. Clearwater Analytics is a great example of a Flywheel company with a unique and sticky product, high net recurring revenue, a significant runway for growth, and a business model and competitive advantage that strengthens with scale.

BSD Analysis:
Polen Capital views Clearwater Analytics as an exemplary 'Flywheel' company with compelling long-term growth prospects in investment portfolio analytics. The company serves as the book of record for over $6.4 trillion in daily assets across diverse client types including investment managers, corporations, insurers, and pension funds. Polen emphasizes the mission-critical nature of Clearwater's software, which provides accuracy, speed, and scalability while reducing operational complexity for clients. The fund manager projects sustained 20% annual revenue growth with meaningful margin expansion over a five-year horizon, reflecting confidence in the company's competitive positioning. The business model benefits from high recurring revenue, sticky client relationships, and network effects that strengthen with scale. Polen particularly values the significant runway for growth as more institutions digitize their investment operations and seek comprehensive analytics solutions.

Pitch Summary:
Alight is a leading cloud-based provider of employee engagement tools and solutions for workplace benefits, payroll, administration, and wealth services. The stock negatively reacted to lower-than-expected bookings guidance for its small but growing business-process-as-a-Service ("BPaaS") segment. Due to the nature of Alight's business model, the market is putting too much emphasis on BPaaS bookings, in our opinion, which is a flawed metric. We believe business remains healthy, and our long-term expectations for high-single-digit revenue growth with expanding margins remain unchanged.

BSD Analysis:
Polen Capital maintains conviction in Alight despite market concerns about BPaaS bookings guidance, viewing the market reaction as misguided focus on a flawed metric. The company operates as a leading cloud-based provider of comprehensive employee engagement solutions spanning benefits, payroll, administration, and wealth services. Polen argues that the market is overemphasizing BPaaS bookings relative to the overall business model, which they believe remains fundamentally sound. The fund manager's unchanged long-term expectations for high-single-digit revenue growth with expanding margins suggests confidence in the company's competitive position and operational leverage. This represents Polen's contrarian view that short-term booking metrics don't reflect the underlying health of Alight's diversified human capital solutions business. The company's cloud-based delivery model and comprehensive service offering provide recurring revenue visibility and margin expansion opportunities.

Pitch Summary:
After adding Gilead in the third quarter, we bought AstraZeneca in the fourth quarter. Each of these stocks present distinct investment cases, but both are reasonably valued and have limited patent expiry or pipeline risk. AstraZeneca possesses a diversified portfolio of pharmaceuticals, which should deliver double-digit earnings growth, yet it trades at just 16x earnings. These stocks were underwritten individually, but collectively we like the idea of increasing our exposure to defensive and growing health care names at below-market multiples.

BSD Analysis:
The managers initiated a new position in AstraZeneca in Q4 as part of their strategy to increase exposure to defensive healthcare names at attractive valuations. They view AstraZeneca as offering compelling growth prospects with expected double-digit earnings growth while trading at a reasonable 16x earnings multiple. The investment thesis emphasizes the company's diversified pharmaceutical portfolio and limited patent cliff risk, providing both growth and defensive characteristics. The managers appreciate the combination of growth potential and below-market valuation, seeing AstraZeneca as offering better risk-adjusted returns than higher-multiple growth stocks. This position reflects their broader strategy of finding overlooked value in healthcare while building defensive exposure. The diversified drug portfolio provides multiple growth drivers and reduces single-product dependency risk.

Pitch Summary:
Doximity is a productivity and professional network app for doctors that generates revenue primarily from biopharmaceutical advertising. The stock was negatively impacted by a weaker growth outlook and the acknowledgment that the company needs to invest to shift towards a self-service model to meet customers' needs better. We believe the advertising return on investment remains best-in-class and physician engagement remains convincing, but we are closely monitoring the position.

BSD Analysis:
Polen Capital expresses cautious optimism about Doximity while acknowledging near-term execution challenges that warrant close monitoring. The company operates a unique professional network for physicians, generating revenue primarily through biopharmaceutical advertising with what Polen considers best-in-class advertising ROI metrics. However, the weaker growth outlook and management's acknowledgment of needed investments to transition toward a self-service model create uncertainty about near-term performance. Despite these concerns, Polen highlights that physician engagement remains strong, which is critical for the platform's long-term value proposition. The fund manager's decision to closely monitor rather than exit suggests they see potential but want to assess management's execution of the business model transition. This represents a wait-and-see approach for a company with strong fundamentals but execution risks.